2/22/11 Midnight Report: Big Flaps in Mid East May Require Libyaplasty
Tim-fucking-berrrrrrrrrrrrrrrrrrrrrrrrrrr. Holy shit is it on like Qadaffi’s dong as protesters in Libya whip themselves up in to a frenzy over the lack of Joanna Krupa’s latest Maxim spread being available to them (or over their oppressive treatment at the hands of Qadaffi, their lack of say in the government, their non-existent job opportunities, and their years of being treated worse than a patron at the Platinum Premier Club). The protests caused oil prices to surge to 2.5 year highs as Libya produces ~1.6MM barrels of oil a day and has the largest reserves in Africa at 44B barrels which is a fuckton of heat for the winter, airplane flights for Al Gore to promote global warming (or rather the solution to global warming or something), and Monster Truck rallies.
The unrest in the Middle East coupled with Qaddafi’s threat to crush it like Michael Gilliland’s career (and Money McBags loves the irony of the former CEO of Wild Oats getting arrested for figuratively sewing his wild oats) and the jump in oil prices spooked investors and the market today even as Saudi Arabia stepped the fuck up and said they will not allow any oil supply disruptions as OPEC has enough spare capacity to avoid a global shortage (though if they have so much oil they are not using, then why the fuck is the price so high? Oh right, cartel pricing. Money McBags knew something in his economic books would come in useful one day, just kidding, he never thought anything would).
And it’s not just oil as Italy shut down a pipeline from Libya that supplies them with ~10% of their natural gas which means demand for Will the Farter abroad is now skyrocketing. But fear not because some guy named Michael Hewson at some place called CMC Markets likened the Middle East protests to an Australian bushfire (as opposed to an Australian fire bush) by saying “..once it takes hold, its very difficult to put out” and “until the situation in the Middle East settles down, you are going to have very wild price swings.” No shit Captain Obvious, what’s next, telling us that Alan Greenspan may have left rates a bit too low for a bit too long or telling us that JWOWW may be covered in awesomeness (and perhaps herpes).
The big question is why the fuck someone wants to not just make a Great Gatsby movie, but make it in 3D, while the bigger question is whether investors will buy this dip and not just ignore high unemployment, falling home prices, and spiking commodities, but also ignore a little something called instability in the most unstable place in the world other than Pam Anderson’s liver or Andy Dick’s rectum.
In macro news today, consumer confidence hit a three year high just as the market sells the fucking rip (though the only thing this consumer is confident in is that Breanne Ashley is hot). The index of consumer attitudes rose to 70.4 from a revised 64.8 which was the highest level since February 2008, back when there were even more Dicks on Wall Street and Steven Tyler was still a man. Also, the expectations index rose to 95.1 from 87.3 as apparently consumers are expecting fundamentals to continue to matter less than Clarence Thomas during oral arguments (though hopefully no one was orally arguing too hard).
Home prices fell again in December in news more backward looking than Alexis Texas‘ boyfriend, because um, it’s almost fucking March. That said, the Case-Shiller index fell by 1%, or .4% when adjusted seasonally (and as always Money McBags’ favorite seasonal adjustments are paprika, cayenne pepper, and Brooklyn Decker‘s saliva). It was the fifth month in a row that the Case-Shiller index fell as 11 cities reached all-time lows and only Washington DC didn’t see prices fall (because you can’t really get lower than a price of $0). For the year 2010, prices fell 2.4%, slightly more than the 2.3% decline analysts had guessed and a fuckload more than needed for a healthy ponzeconomy™.
In the market, HD had better profit and earnings than guessed and raised its fiscal-year outlook as shoppers took up long-delayed maintenance and repair projects for their homes like buying extra masking tape to reinforce their cardboard boxes and shovels to dig proper latrines. Sales at Home Depot stores open at least a year rose 3.9% globally, with U.S. same store sales rising 4.8% thanks to a shift to cheaper products like faucets, paints, and Borders franchises.
In other earnings news, WMT had its 7th consecutive quarterly sales drop at existing US stores so perhaps they shouldn’t have pared entire SKUs like the dairy aisle. WMT has also lost customers to dollar stores though as inflation rises, dollar stores will become more a thing of the past than 8-tracks, beehive hairdos, and civility. The company did beat analyst eps guesses of $1.31 by $.03 on sales growth of 2.5% which was below analyst guesses but apparently even world domination takes a few quarters off.
Finally, Macy’s reported a higher profit as same store sales rose ~4.5% thanks to a strong holiday season and appealing to local tastes such as offering Boston beltbuckles, Seattle pantyhose, and the rare Baltimore nose rings. BKS declined more than 5 percent after announcing it would suspend its dividend, not providing a final quarter outlook because of the bankruptcy filing of Borders, and being in a business that is becoming more obsolete than TV antenna repairman or financial planners for the middle class. And AMZN joined NFLX and Sears (yep, Sears) in the video streaming business by offering unlimited streaming to it’s premium customers for ~$70 a year only a couple of weeks too late for Whitney Tilson’s short to work but Money McBags is sure Mr. Tilson will cover that in between sips of RC Cola and Warren Buffett’s tears at the next Value Investor’s Conference.
As for small caps, well, everything went down because the small illiquid names that Money McBags covers just trade with more volatility than the market so this can open up cockriffic buying opportunities (except for in DTLK because as Money McBags pointed out this weekend, their guidance was craptacular enough to sell out of your position, unless your position was reverse cowgirl and DTLK was Kate Bosworth). That said, one of Money McBags’ favorite little stocks, KITD, is getting back to the point where it is just way too fucking cheap (trading at ~6x potential 2011 EBITDA) so as it drops in to the $12s, it is time to start adding to positions.
Tomorrow Money McBags hopes to break down CTGX’s Q, perhaps take a look at GA, and continue to point out investing opportunities such as short WGO and long Chrishell Stause. Yeah, Money McBags has been short WGO all the way up but it is trading at a cockposterous 30x a lucky to get their earnings guess, sells expensive discretionary products that rely on oil more than Paris Hilton relies on Valtrex, and finally saw dealers restock so it will start having flat growth at best (after one more Q). If the market is going to sell off, you might as well be short a high beta name that also doubles as a shitty company (ok, maybe that’s not fair, WGO isn’t a shitty company, but they are in a business shittier than a coprophilia party host). So be smart about trades, make sure you are properly hedged, and get ready to buy should some of these quality names gap down with the market.
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about 5 years ago - No comments
The market traded down today as earnings season began not with a bang, or a whimper, but with a Kirstie Alley-esque thud as AA missed revenue guesses (and the 6% drop in the stock likely caused some AA investors to fall off the wagon), Japan’s market fell again as the severity of the nuclear disaster
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about 6 years ago - No comments
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about 6 years ago - No comments
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